Do-It-Yourself (DIY) Investor: Would You Take a Lump Sum for Social Security?

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Tuesday, June 5, 2012

Would You Take a Lump Sum for Social Security?

Often retirees are offered a choice between a lump sum payment and a pension when leaving a company. My question is: would you prefer a lump sum at age 62 or the specified CPI adjusted social security payment for as long as you live? Assume that the Social Security payment is guaranteed. Note that taking the lump sum gives you control of the assets, as well as a legacy when you die--assuming there is something left. Note as well that you have the money to invest and could run up the value if you are an astute investor and the markets are friendly.

To put numbers on it, assume you are 62 today and you can get $2,000/month or a lump sum of $420,022. Quote was from Berkshire Hathaway Group.

Lump sum or Social Security?